Tuesday, March 03, 2015 07:38am
North Adams, MA now: 1 °   
Send news, tips, press releases and questions to info@iBerkshires.com
The Berkshires online guide to events, news and Berkshire County community information.
SIGN IN | REGISTER NOW   

Home About Archives RSS Feed
@theMarket: January Could Be Important
By Bill Schmick On: 04:18PM / Friday January 04, 2013
Important
0
Interesting
0
Funny
0
Awesome
0
Infuriating
0
Ridiculous
0

Now that the Fiscal Cliff is behind us and the spending battle is dead ahead, investors are wondering what lies ahead. Historically, the market's performance in January has been important. Since it is a good signpost for the future over the last 60 years, let's examine some of the indicators that many professional traders use.

Many investors look to the first five days of January as a gauge of where the markets are going for the rest of the year. During the last 40 years when those five first days were gainers, the markets were up for the entire year 85 percent of the time. For example, last year the S&P 500 Index gained 1.2 percent in the first five days of January. As a result, the S&P 500 Index was over 13 percent. That was close to the historical average. Over the last 39 years, the markets gained an average of 13.6% when the first five days of January were gainers.

Conversely, when the first five days are negative the markets were down for the year, but only 47.8% of the time. The indicator therefore, does not work as well on down periods. Readers should be aware that, in general, during post-election years the markets have not done well. Only 6 out of the last 15 post-election years saw gains in the first five days of the year. It looks like 2013 will be an exception.

Building on the first five days theory "where the S&P 500 goes in January, so goes the year" is the most widely used barometer traders follow and with good reason. Over the last 62 years (since 1950) this indicator has been accurate 88.7 percent of the time. Down Januarys invariably ushered in a new or extended bear market, a flat market or at least a 10 percent correction. The average loss for those years was 13.9 percent.

I guess the only good thing good to be said for those down years is that they were great buying opportunities since invariably the year after saw significant gains.

There is also something called the "January Barometer Portfolio," which is made up of the S&P's three best performing sectors in January. If you invested in them and held them through the February of the following year, you would beat the S&P Index on average by 1.4 percent. Finally, Januarys have been the best month of the year for NASDAQ performance consistently since 1971.

So here it is Jan. 4, the last day of the market week and stocks are up. So far, if the indicators hold, 2013 promises to be an up year for investors. I agree with that assessment. But that doesn't mean that everything will go straight up.

Now that the Fiscal Cliff is behind us, we face a long litany of worries. The battle over spending cuts has begun. We will see the debt ceiling reached very soon. The government will run out of money (again) by the end of February. Without a deal on spending, the drastic cuts in defense and entitlements trigger on March 1. That would hurt the economy. And in the wings, the credit agencies are waiting to downgrade our government debt once again unless a real effort is made to address the deficit.

Make no mistake, my readers, we will continue to be thrown between hope and despair by those fools in Washington. But markets normally climb walls of worry. My advice is to ignore the noise in Washington. Keep your eye on what is important— the growth in the economy. Those of you who followed my advice in November stayed invested, expected a last minute deal of the Cliff and were rewarded for your patience and perseverance.

I am waiting like everyone else to see what the rest of January brings. Until then, I will ride the ups and downs while continuing to buy any dip especially in emerging markets, (including China), emerging Europe and Europe overall. Hang tough and see it through until I say otherwise.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.


0 Comments
     
News Headlines
Hancock School Committee Opens Conversation About Expansion
Adams Field Renovation Plan Makes It Into Preliminary Budget
Taconic High School Project Estimated at $116M
St. Stanislaus Preschoolers Learn a Thing Or Two From Dr. Seuss
Berkshire Taconic President Leaving At End of 2015
BMC North Reopens Operating Rooms
McCann Tech Robotics Team Demonstrates for School Committee
Williamstown Economic Development Panel Hears from North Adams Planner
New Business Offers Organic Products From Berkshires & Beyond
Battalion Falls at Home, Needs Miracle to Finish Fourth

Bill Schmick is registered as an investment advisor representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires. Bill’s forecasts and opinions are purely his own and do not necessarily represent the views of BMM. None of his commentary is or should be considered investment advice. Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com Visit www.afewdollarsmore.com for more of Bill’s insights.

 

 

 



Categories:
@theMarket (161)
Independent Investor (218)
Archives:
February 2015 (7)
January 2015 (9)
December 2014 (7)
November 2014 (4)
October 2014 (9)
September 2014 (5)
August 2014 (7)
July 2014 (2)
June 2014 (6)
May 2014 (9)
April 2014 (8)
March 2014 (5)
Tags:
Selloff Metals Greece Euro Taxes Fiscal Cliff Markets Retirement Commodities Currency Election Congress Debt Ceiling Energy Jobs Federal Reserve Stock Market Stocks Bailout Interest Rates Fed Stimulus Crisis Pullback Recession Japan Debt Europe Economy Housing Banks Europe Oil Deficit Rally
Popular Entries:
The Independent Investor: Don't Fight the Fed
The Independent Investor: Understanding the Foreclosure Scandal
@theMarket: QE II Supports the Markets
The Independent Investor: Does Cash Mean Currencies?
@theMarket: Markets Are Going Higher
The Independent Investor: General Motors — Back to the Future
The Independent Investor: Will the Municipal Bond Massacre Continue?
The Independent Investor: How Will Wall Street II Play on Main Street?
@theMarket: Economy Sputters, Stocks Stutter
The Independent Investor: Why Are Interest Rates Rising?
Recent Entries:
@The Market: Full Steam Ahead
The Independent Investor: New Fiduciary Rule Would Benefit All of Us
The Independent Investor: How to Make the Most Out of Social Security
@theMarket: A Race to the Bottom
The Independent Investor: The Grecian Drama
@theMarket: The Labor Market Is on Fire
The Independent Investor: Joint Business Is Jumping
The Independent Investor: College Savings Accounts Are Not Risk-Free
@theMarket: More Stimuli Equal Higher Markets
The Independent Investor: The European Central Bank Delivers


View All
Girls BB: Middlesex @ PHS
The Generals rallied and rode an 18-point, 16-rebound...
Thunderbolt/Thunderfest 2015
The Thunderbolt Ski Race held its 80th anniversary run on...
Girls BB: Wahconah vs Hoosac...
No.1 Hoosac is heading back to the Cage as they beat No.9...
10X10 Art Party 2015
The 10X10 Festival's Real Art Party fundraiser, organized...
Berkshire Chamber Nite @...
Berkshire Chamber night on Wednesday at Mingo's in North...
Boys BB: Renaissance vs Drury
For Drury senior Justin Girard, the 63-61 quarter-final win...
Boys BB: Mount Greylock vs...
The Hoosac Valley boys basketball team got enough...
Boys BB: Quabbin vs...
Jerry McDonough scored 15 points, and Scott Steinman added...
Girls BB: Lee vs Mount...
Karli Retzel hit a 3-pointer and went 2-for-2 at the foul...
Boys Hockey: Wahconah vs...
The No. 5 Warriors won over No. 4 Belchertown 2-0 Tuesday...
Boys Hockey: Mt Everett vs...
Amherst No. 3 seed eliminated No. 6 Mount Everett 3-0...
Boys BB: Holyoke Catholic vs...
Monday evening, as the No. 5 Lenox basketball team was...
Congressman Neal Tours...
U.S. Rep. Richard Neal toured Unistress, Modern Mold & Tool...
Winterfest 2015
Chowder, wagon rides and ice sculptures attracted residents...
State Voc Semifinals
FINAL: Franklin Tech advances to State Voc Final with 63-44...
Berkshire County Bowling...
Lee won the Berkshire County Bowling Title over Drury 3...
Girls BB: Middlesex @ PHS
The Generals rallied and rode an 18-point, 16-rebound...
Thunderbolt/Thunderfest 2015
The Thunderbolt Ski Race held its 80th anniversary run on...
Girls BB: Wahconah vs Hoosac...
No.1 Hoosac is heading back to the Cage as they beat No.9...
10X10 Art Party 2015
The 10X10 Festival's Real Art Party fundraiser, organized...
Berkshire Chamber Nite @...
Berkshire Chamber night on Wednesday at Mingo's in North...
| Home | A & E | Business | Community News | Dining | Real Estate | Schools | Sports & Outdoors | Berkshires Weather | Weddings
Advertise | Recommend This Page | Help Contact Us | Privacy Policy| User Agreement
iBerkshires.com is owned and operated by: Boxcar Media 102 Main Street, North Adams, MA 01247 -- T. 413-663-3384 F.413-664-4251
© 2000 Boxcar Media LLC - All rights reserved